Despite the ongoing economic uncertainty created by the COVID-19 pandemic, there are many ASX technology companies that are growing rapidly to meet the demands of an evolving workforce. One such company is cloud-based communications platform developer Whispir Ltd (ASX: WSP). The Whispir share price has soared recently – up close to 90% since the beginning of July – after the company reported strong results for the June quarter.

The quarter brought record growth in net new customers, with the total number of customers increasing by 72 to 630 by 30 June. Annualised recurring revenues jumped 35.7% year on year to $42.2 million, while cash receipts were up 36.5% to $11.3 million. Prudent cost-cutting also meant that net cash used in operating activities was just $0.1 million during the quarter.

These were excellent results in challenging market conditions, and meant the company was on track to meet all of the key FY20 financial metrics outlined in its 2019 prospectus.

What does Whispir do?

Whispir is a software-as-a-service (SaaS) company that develops integrated communications platforms for corporate clients. It provides a central platform from which its customers can create customisable templates for email, web and social media communications, as well as manage workflows and drive insightful reporting.

The company has adapted its product offering to meet the unique demands businesses have faced during COVID-19. It has developed templates clients can use to keep their stakeholders updated on their operations throughout the pandemic. It has now also rolled out additional templates designed to manage return-to-work scenarios as lockdown restrictions ease across the country.  

As an example, the company reported that one of its clients, Mt Buller Ski Resort, had been using Whispir’s platform and its communications templates to manage its contact tracing requirements.

Why I think the Whispir share price is a buy

Despite the recent rally in the Whispir share price, it remains a relatively small company with a market capitalisation of just over $400 million. The underlying business is still gathering momentum, with net new customer numbers increasing quarter on quarter.

A high proportion of its annualised revenues are also coming from recurring sources. These more reliable income streams give the company greater freedom to manage expenditures and budget more accurately.

Whispir also has a healthy balance sheet, with cash and equivalents totalling $15.2 million as at 30 June 2020. This means it has the cash on hand to pursue expansion opportunities, as well as ride out any short-term market volatility.

In my view, all this means that the Whispir share price is well-positioned to deliver sustainable growth over the longer term.

Alongside other under-the-radar ASX software companies like Objective Corporation Limited (ASX: OCL) and MNF Group Ltd (ASX: MNF), Whispir is shaping up as one of the success stories to come out of the COVID-19 ‘new normal’.

More reading

• 4 exciting small cap ASX shares to watch closely
• Could these exciting ASX shares be future stars?
• These soaring tech shares are making savvy investors rich
• Are these small cap ASX shares future stars?
• Why Sezzle and these ASX shares recorded huge gains in July

Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Objective Limited. The Motley Fool Australia owns shares of and has recommended MNF Group Limited. The Motley Fool Australia has recommended Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Lynas Corporation Ltd (ASX: LYC) share price won’t be going anywhere today after requesting a trading halt.

The rare earths producer requested the trading halt following the release of its full year results and the announcement of a major equity raising.

FY 2020 results.

For the 12 months ended 30 June 2020, Lynas delivered revenue of $305.1 million and earnings before interest, tax, depreciation, and amortisation (EBITDA) of $59.8 million. This was a 16% and 40.6% decline, respectively, year on year.

Management advised that this weak result was caused by temporary production halts and weak market conditions during the year.

Also falling heavily was its cash flows from operating activities. They came in at $32.1 million, down from $104.1 million in FY 2019. Though, things would have been worse had it not been for the company’s focus on cost management during the year.

This left Lynas with a cash balance of $101.7 million at the end of FY 2020.

Lynas CEO and Managing Director, Amanda Lacaze, commented: “Our company entered the COVID-19 pandemic in robust financial shape, as a result of a number of years of prudent capital management. However, our FY20 financial performance has been affected by the COVID-19 related shutdown as well as lower market prices and the temporary production halt in December after we reached the annual concentrate processing limit for calendar year 2019.”

“While this was disappointing, we have built a resilient business and despite the lower market pricing, our performance in quarters not affected by the production halts remained strong. This resilience was also shown in the way our people quickly adapted to new ways of working and new COVID-19 protocols to protect the health and wellbeing of all staff,” she added.

Equity raising.

In addition to its results, Lynas has announced a fully underwritten equity raising to raise approximately $425 million.

Lynas is raising the funds via a 1 for 7.7 pro-rata accelerated non-renounceable entitlement offer and institutional placement at an issue price of $2.30 per share. This represents an 11.9% discount to last close price.

Proceeds from the equity raising will be used to fund major projects that are expected to be delivered in 2023 and will be essential steps towards the Lynas 2025 growth vision. These include the planned Kalgoorlie Rare Earth Processing Facility and associated upgrades at the Lynas Malaysia Plant.

CEO Amanda Lacaze commented: “The Lynas 2025 growth vision announced in May 2019 is an exciting opportunity to transform our business and grow with our key markets. Advanced manufacturing supply chains need Rare Earths and COVID-19 has brought into sharp focus the need for resilient and diversified supply chains.”

“Lynas is ideally placed to meet this need as we are a proven and profitable operation and the only significant producer of separated Rare Earths outside of China. By strengthening our balance sheet, we can mitigate global economic uncertainties and continue to progress our foundation project which is the Kalgoorlie Rare Earth Processing Facility. This facility provides the opportunity to develop a Critical Minerals processing hub in the Goldfields. The project has received strong support from the Kalgoorlie-Boulder City Council, Western Australian and Australian governments,” she concluded.

More reading

• Why the rise of electric vehicles could benefit ASX mining shares
• ASX 200 Weekly Wrap: Surging commodity prices snap ASX 200’s losing streak
• These were the best performing ASX 200 shares last week
• Why this ASX miner that’s missing the rally is one of my key picks for FY21
• Lynas share price lifts 10% on signing of US Department of Defense contract

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Every Monday I like to look at ASIC’s short position report to find out which shares are being targeted by short sellers.

This is because I believe it is well worth keeping a close eye on short interest levels as high levels can sometimes be a sign that something isn’t quite right with a company.

With that in mind, here are the 10 most shorted shares on the ASX this week according to ASIC:

• Myer Holdings Ltd (ASX: MYR) remains the most shorted share on the Australian share market with 12% of its shares held short. The department store operator continues to be targeted by short sellers who appear to believe the shift to online shopping will accelerate its structural decline.
• Webjet Limited (ASX: WEB) has seen its short interest spike to 12%. A recent rebound in the Webjet share price appears to have caught the eye of short sellers. Especially given how recent border closures have hit the domestic travel market recovery hard. Webjet releases its results this week.
• Speedcast International Ltd (ASX: SDA) continues to have short interest of 11.7%. The communications satellite technology provider’s shares have been suspended since February while it declares itself bankrupt. Last week it made progress and announced that it has received a US$395 million equity commitment to complete its chapter 11 recapitalisation.
• Inghams Group Ltd (ASX: ING) has 10.2% of its shares held short, which is up week on week once again. Short sellers appear to believe a disappointing result is coming from the poultry company due to rising input costs and an unfavourable sales mix.
• Orocobre Limited (ASX: ORE) has seen its short interest push higher week on week again to 8.9%. The lithium miner continues to be a favourite of short sellers due to an oversupply of the battery making ingredient and weak demand.
• InvoCare Limited (ASX: IVC) has entered the top ten with short interest of 7.9%. Investors appear concerned that the funeral company may struggle during the pandemic from social distancing restrictions.
• CLINUVEL Pharmaceuticals Limited (ASX: CUV) has seen its short interest remain flat at 7.8%. This may be in relation to the impact lockdowns are having on demand for its SCENESSE product. This product is used to prevent skin damage from the sun in people with erythropoietic protoporphyria.
• FlexiGroup Limited (ASX: FXL) has seen its short interest fall week on week to 7.8%. Short sellers remain unsure about the financial services company’s overall prospects despite its growing BNPL business.
• Bank of Queensland Limited (ASX: BOQ) has seen its short interest fall slightly to 7.7%. A series of better than feared updates out of the banking sector may have led to some short sellers closing positions.
• Zip Co Ltd (ASX: Z1P) has short interest of 7.5%, which is down notably week on week. Some short sellers may be closing their positions ahead of its full year results this month. If history is a guide, a strong result could lead to its shares rocketing higher.

More reading

• Can these two ASX buy now, pay later companies become the next Afterpay?
• 5 things to watch on the ASX 200 next week
• Should you invest in Splitit shares?
• Is the Bank of Queensland share price a better buy than Bendigo and Adelaide Bank?
• Is the Afterpay share price a buy?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended FlexiGroup Limited and InvoCare Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Beach Energy Ltd (ASX: BPT) share price is one to watch this morning after narrowly missing its full-year production guidance.

What were the key takeaways?

Revenue for the year ended 30 June 2020 (FY20) fell 17% from the prior corresponding period (pcp) to $1,728.2 million.

Beach had more than $600 million in sales gas and ethane revenues with more than 99% of gas sold under contract.

FY20 production fell 9% to 26.7 million barrels of oil equivalent (MMboe), below the 27-28 million MMboe guidance range. The Aussie energy group drilled 178 wells with an 81% overall success rate during the year.

FY20 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) fell 19% to $1,108 million. Beach’s underlying EBITDA margin fell 400 basis points to 67%.

Net profit after tax (NPAT) slumped 13% lower on pcp to $500.8 million while underlying NPAT fell 18% to $461.0 million.

The Beach Energy share price is down 41.5% to $1.48 per share in 2020 prior to this morning’s open.

Net tangible asset backing jumped to $1.19, up from $1.02 per share in FY19. Net cash slumped 71% to $50 million but Beach did announce a final dividend.

Beach Energy paid out $45.6 million in dividends, unchanged from FY19, which translated to a 1.0 cents per share (cps) payment.

Combined with a 1.0 cps interim dividend, the Aussie energy group paid a 2 cps total dividend for FY20.

The Aussie energy group reported organic 2P reserves replacement above 200% for three straight years.

2P reserves increased by 8% from 326 MMboe to 352 MMboe during the year with 2P reservees life increased from 12.4 years to 13.2 years.

New rig contract

The Beach Energy share price is worth watching after the energy group reported a new offshore drilling agreement with Diamond Offshore General Company this morning.

The agreement will use the Ocean Onyx Semi-submersible rig to undertake Beach’s Victorian Otway offshore drilling program.

The agreement provides for the drilling of up to 9 wells (6 firm with 3 options) with operations expected to start between December 2020 and March 2021.

A new settlement agreement was also signed to dismiss all current legal proceedings with Diamond.

Outlook for Beach Energy share price

The group has reduced planned capital expenditure for FY21 by 30% with an expected slowdown due to the coronavirus pandemic. 

Production is expected to be 26.0-28.5 MMboe with capital expenditure of $650-750 million.

Underlying EBITDA is expected to fall by 10-20% to $900-1,100 million.

Beach reported a 5-year outlook with production on track to deliver 37-43 MMboe in FY25.

The Beach Energy share price is one to watch as management reduced its growth outlook based on COVID-19 and the expenditure deferral.

Beach’s 5-year free cash flow outlook has been revised from $2.7 billion to $2.1 billion based on a lower oil price assumption.

More reading

• The next battle facing these ASX stocks will come from within
• 5 things to watch on the ASX 200 on Thursday
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Tuesday
• Worley share price jumps on contract win and is my key pick in the sector

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Kogan.com Ltd (ASX: KGN) share price is dropping lower on Monday following the release of its full year results.

At the time of writing the ecommerce company’s shares are down 3% to $21.12.

How did Kogan perform in FY 2020?

For the 12 months ended 30 June 2020, Kogan reported gross sales of $768.9 million, up 39.3% on the prior corresponding period. From this, revenue came in at $497.9 million, up 13.5% year on year. A key driver of this growth was the shift to online shopping during the pandemic, which led to a 35.7% increase in its active customer base to 2,183,000.

Thanks to a 4.7 percentage point increase in the company’s gross margin to 25.4%, Kogan’s gross profit increased 39.6% to $126.5 million. This margin expansion was underpinned by the growth in commission-based or seller-fee-based revenue across new verticals and Kogan Marketplace.

Also growing strongly was its adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA). Despite a big investment in marketing, Kogan reported a 57.6% increase in adjusted EBITDA to $49.7 million. And on the bottom line, the company reported a 55.9% increase in net profit after tax to $26.8 million.

In light of this strong form, Kogan declared a fully franked final dividend of 13.5 cents per share. This was up 64.6% on the prior corresponding period and brings its full year dividend to 21 cents per share.

What were the drivers of Kogan’s growth?

Kogan successfully delivered growth across its business in FY 2020. The Kogan Marketplace was arguably the highlight, with its second half sales growing 71.2% on the first half.

This was supported by Exclusive Brands revenue and gross profit growth of 26.4% and 43.7%, respectively, for the year. Also performing strongly were the Kogan Internet and Insurance businesses. Kogan Internet reported a 90.9% increase in customer numbers and the Kogan Insurance business grew commission-based revenue by 36%.

The laggard in the group was its Third-Party Brands segment, which reported gross profit growth of 3.3% for the year.

Retail revolution.

Ruslan Kogan, Founder & CEO of Kogan.com, revealed that the company is experiencing some very positive trends. 

He said: “There is a retail revolution taking place as more and more shoppers learn about the benefits of eCommerce. We’re seeing record numbers of first time customers, who then go on to make repeat purchases at a 40% faster pace than previously.”

“For us this is a very exciting trend that shows that once customers learn about shopping online, they change their ongoing behaviour. Once someone discovers the benefits of online shopping, I struggle to see why they would ever go back to the old way of doing things. After almost 15 years of preparation, the revolution occurring in retail represents a significant opportunity for Kogan.com,” he added.

Outlook.

Kogan isn’t resting on its laurels and notes that “there is always more that we can do and new ways we can delight our customers.”

In light of this, it intends to further develop and enhance the Kogan Marketplace, grow its Active Customer base by investing in its platform, expand its Exclusive Brands and Third-Party Brands product divisions, and review ongoing acquisition opportunities.

No guidance will be given for the year ahead. Instead it plans to provide regular business updates during the year.

Speaking of which, in July Kogan achieved unaudited gross sales growth of over 110% and gross profit growth of over 160%. In addition, monthly adjusted EBITDA was more than $10 million in July, which compares very favourably to FY 2020’s entire adjusted EBITDA of $49.7 million.

More reading

• 4 ASX shares to profit from booming ecommerce
• How to find the rare ASX retail share winners
• 4 ASX shares to buy now for a post-coronavirus world
• Can the Kogan share price keep going?
• ASX reporting season reveals some upside surprises

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Evolution Mining Ltd (ASX: EVN) share price surged 6.5% higher on Friday after a strong earnings result. With gold prices climbing higher, I think there are a couple of ASX gold shares worth a look right now.

Why I like Evolution 

I think the Evolution share price could still have further to climb after a solid full-year result.

Evolution posted a record underlying net profit after tax result of $405.4 million.

FY20 production totalled 746,463 ounces, down from 753,001 ounces in FY19. The group’s all-in sustaining cost  of A$1,043 per ounce was also among the lowest-cost producers in the world.

The ASX gold share rocketed higher on Friday and is now up 62.4% in 2020. That could put off some investors but I think there’s more potential upside for gold prices.

Given a solid growth outlook for both costs and production levels, I think the Evolution share price has further gains ahead in 2021.

And one other ASX gold share

It’s not just Evolution that I’ve got my eye on in 2020. The Saracen Mineral Holdings Limited (ASX: SAR) share price is another that could climb higher.

Saracen shares are already up 69.0% this year with a market capitalisation of $6.2 billion.

I’ve got my eye on the Saracen share price ahead of its August full-year results announcement. There’s no official date for the annual report release but I think Evolution’s result bodes well for profitability.

The ASX gold share could be on the move even higher if we see a strong bottom line. I’d expect the group’s Kalgoorlie Super Pit Mine purchase to flow through to earnings in FY21.

That means this year’s results will largely reflect existing operations. However, I’d expect that to still deliver a decent profit and maybe a new record high for the ASX gold share.

Foolish takeaway

These are just a couple of the ASX gold shares that I like at the moment. Large-cap miners could be set to outperform even further after the dust settles on the August earnings season.

More reading

• Why November could be the best time to re-join the gold bull run
• Why Baby Bunting, Evolution, Mesoblast, & Xero shares are zooming higher
• 5 things to watch on the ASX 200 on Friday
• Northern Star share price falls 1.6% on trading update
• Evolution Mining shares on watch as underlying profit jumps 86%

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The JB Hi-Fi Limited (ASX: JBH) share price is on watch this morning after the electronics retailer delivered its full year results. The market had high expectations for the JB Hi-Fi share price following strong sales since the onset of the coronavirus pandemic. The retailer has largely delivered, with profits up 33.2% thanks to strong growth in sales. 

Sales climb as digital takes off 

JB Hi-Fi reported total sales of $7.9 billion for FY20, an increase of 11.6% on FY19. Sales momentum was strong throughout the year and accelerated in Q4 as customers spent more time working, learning, and seeking entertainment at home. Sales growth was seen across the JB Hi-Fi Australia and The Good Guys businesses, which grew sales 12.5% to $5.32 billion and 11.2% to $2.39 billion respectively. The JB Hi-Fi New Zealand business saw sales decline 5.7% to NZD$222.8 million due to store closures resulting from New Zealand Government restrictions. 

JB Hi-Fi is continuing to invest in its digital and online capacity, including launching a new platform for JB Hi-Fi Australia. JB Hi-Fi Australia online sales grew 56.6% to $404 million, or 7.6% of total sales in FY20, with online sales up 155.2% in Q4. Across the group, online sales totalled nearly $600 million for the financial year, a 50% increase year on year.   

Profits and dividends accelerate 

JB Hi-Fi converted increased sales into higher profits – underlying NPAT increased 33.2% to $332.7 million. The jump in profits flowed through to the final dividend, which was up 76.5% to 90 cents per share fully franked. This gives a payout ratio of 65% of underlying NPAT. The Board believes this ratio appropriately balances the distribution of profits to shareholders, repayment of debt, and reinvestment of earnings for future growth. 

What’s the outlook for the JB Hi-Fi share price? 

JB Hi-Fi reported strong sales growth in July with Australian sales up 42.1% for the month. Sales at The Good Guys were up 40.4%, while sales for JB Hi-Fi New Zealand were up 9.1%. This growth may be tempered somewhat by the implementation of stage 4 restrictions in Melbourne, which have forced the closure of 46 JB Hi-Fi stores and 21 The Good Guys stores. Thankfully, online and commercial operations continue to trade and a significant acceleration has been seen in online sales in Victoria since store closures. 

More reading

• 5 things to watch on the ASX 200 on Monday
• Metcash share price and these ASX stocks just got upgraded by leading brokers
• How to find the rare ASX retail share winners
• Top ASX dividend shares to buy in August 2020
• ASX reporting season reveals some upside surprises

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The world’s most popular trade points to further upside for ASX gold miners although the bulls may have to wait till the end of the year to see a payoff.

The wildly popular trade I am referring to is to short the US dollar. A survey by Bank of America found that 36% of fund managers called this their favourite play in August, reported Bloomberg.

This is up from 30% in July and it’s well ahead of other favoured trades, according to BoA. This is the most bearish sentiment against the US dollar since the survey began and investors haven’t been this underweight on the currency since 2008.

Gold benefits from a weaker US dollar

The pessimistic view on the US dollar is good news for gold as the two tend to move in opposite directions.

If the US dollar bears are right, the recent retreat of the gold price from record highs over US$2,000 could be relatively short-lived.

This in turn means the weakness in the Newcrest Mining Limited (ASX: NCM) share price, Evolution Mining Ltd (ASX: EVN) share price and Northern Star Resources Ltd (ASX: NST) share price is a buying opportunity.

Crowded trade risk is no deterrent

Shorts are bets that profit from a decline in value of the underlying asset, and these experts do not seem concerned that this is a “crowded trade”.

A crowded trade describes a situation when most investors are betting on the same outcome. This often leads to volatility as the asset price will surge if all the short-sellers close their positions at the same time (called a short-squeeze).

As it stands, a number of hedge funds have already taken profit on their US dollar shorts as they believe the currency is set to rebound after tumbling around 10% since the March peak.

USD and gold outlook in 2021

However, no one believes the US dollar is going to make a big comeback – not even those that have closed their short positions.

Experts believe a weakening US currency will be an ongoing theme right through 2021, if not longer, although history suggests the greenback may find support over the next few months.

US dollar peak in November

Over the past decade, the Bloomberg Spot Dollar Index (a measure of the US dollar against other major currencies) registered gains in August to November.

Further, the index made a 3% average gain in the quarter when there is a presidential election. There’s a US presidential election coming up this November, and the greenback may only peak after this event.

Eroding reserve status a boon for gold price

However, the bigger longer-term driver for the gold price will rest on whether the US currency loses its prestigious position as the world’s reserve currency.

Some believe this unthinkable event is unfolding before our eyes as central banks around the world have been stocking up on gold over the past few years and are likely to hold less US dollar.

A divided America and the rise of protectionism is aiding this belief and creating a perfect storm for gold.

More reading

• Evolution Mining and 1 other ASX gold share in the buy zone
• These were the highlights of ASX reporting season last week
• Take a look at last week’s worst performing ASX shares
• 5 things to watch on the ASX 200 on Monday
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Brendon Lau owns shares of Evolution Mining Limited and Newcrest Mining Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ASX reporting season continues to deliver, revealing the impact of the coronavirus on share price bottom lines. It’s been full of surprises as some companies deliver better than expected results, while others slash dividends in the face of retreating revenues. Last week was no exception, with some big financial shares revealing falling profits, but miners and retailers reporting surprisingly strong results. 

ASX reporting season: Is the worst over for banks? 

Commonwealth Bank of Australia (ASX: CBA) reported its full year results on Wednesday, slashing its dividend as profits tumbled. Cash profits declined 11.3% thanks to high loan impairment provisions related to COVID-19. The final dividend was reduced to 98 cents, in line with APRA’s guidance that banks should retain at least 50% of earnings. Full year dividends were $2.98, a 31% decrease on FY19. 

National Australia Bank Ltd (ASX: NAB) reported more resilient than expected third quarter results on Friday. Unaudited cash earnings were $1.55 billion, 7% down on 3Q19. Compared with 1H20, credit impairment charges actually fell 2% to $570 million. This reflected the non-repeat of COVID-19 economic adjustment top-up in March. The NAB share price rose in response, and was up 7.4% over the week. 

Retail goes from strength to strength 

Stronger than expected results from the retail sector continued when Breville Group Ltd (ASX: BRG) reported full year results on Thursday. Breville saw revenue climb 25.3% over the full year as customers spending more time at home upgraded home appliances.

Profits were skewed by abnormal expenses including an increase in doubtful debt provisions and a write-down on the company’s proprietary internet of things platform. CEO Jim Clayton said, “In FY20 we faced a cluster of headwinds in the form of Brexit uncertainty, exchange rates, US tariffs and COVID-19, and equally we had our share of good fortune in terms of our inventory levels and the relevance of our products to the ‘new normal’.”

Gold mining shines through

On Friday, gold miner Newcrest Mining Limited (ASX: NCM) reported underlying profit of $750 million, up 34% on the previous year.

The miner was helped by increases in the gold price over 2020 – gold is now trading at around $2700 an ounce, up from around $2200 at the start of the year. Although gold production was lower, at 2,171,118 ounces compared to 2,487,739 ounces in FY19, revenue was 5% higher.

The miner’s strong balance sheet and performance allowed it to increase dividends for the fifth consecutive year, with the full year dividend 14% higher than last year. 

More reading

• Why November could be the best time to re-join the gold bull run
• Take a look at last week’s worst performing ASX shares
• Take a look at last week’s best performing ASX shares
• 5 things to watch on the ASX 200 on Monday
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX buy now, pay later share market darling Afterpay Ltd (ASX: APT) has been hogging most of the media spotlight recently.

And not without cause – despite a gloomy economic outlook and collapsing consumer sentiment, its share price has skyrocketed almost 850% since March.

With a market cap nearing $20 billion, it is now bigger than ASX heavyweights like Ramsay Health Care Limited (ASX: RHC) and REA Group Ltd (ASX: REA).  

But there are plenty of other companies that also operate in the ASX  buy now, pay later space. Most of you have probably heard of Zip Co Ltd (ASX: Z1P). But what about Splitit Ltd (ASX: SPT), Sezzle Inc (ASX: SZL), Openpay Group Ltd (ASX: OPY) or FlexiGroup Limited (ASX: FXL)?

These companies have all been lighting up the market recently. Since March, FlexiGroup has gained more than 200%, Splitit shares are up close to 600%, Openpay has soared 1000%, and Sezzle shares have skyrocketed an astronomical 2000%!

These sorts of returns are difficult to ignore, so let’s look at the driving forces behind these incredible gains.

We’ll focus on the two ASX  buy now, pay later companies that have delivered the strongest recent returns: Sezzle and Openpay.

Sezzle

Let’s start with Sezzle. Like Afterpay, Sezzle gives consumers the ability to repay their purchases over 4 fortnightly instalments. Provided all instalments are paid on time, there are no interest or late fees charged to the customer – instead, Sezzle makes its money by charging a small fee to the merchant.

The reason you may not have heard too much about Sezzle is that it is headquartered in Minneapolis and predominantly targets the North American market. It has been growing rapidly in the US, driven by rising rates of online shopping spurred by COVID-19 lockdowns.

Sezzle reported cash receipts from customers for June of almost US $170 million, driven by record growth in both active customers and active merchants. The company is targeting US$1 billion in annualised underlying merchant sales by the end of this year.

Openpay

Openpay’s point of difference from other ASX  buy now, pay later companies is that it gives users the option to spread their repayments out over longer timeframes – ranging up to 24 months.

It has also reported record growth recently: active customers soared 145% higher year-on-year in July, while active merchants increased 48%. Revenues for the month came in at $2.1 million, a year-on-year uplift of 73%.

While its flexible repayment plans might be appealing to customers, it’s a riskier business model for investors. Companies like Afterpay and Sezzle both turn over their receivables quickly (generally within 6 weeks), which promotes smaller purchases and leaves less time for a customer’s credit to deteriorate.

This is reflected in the companies’ differing net transaction losses. For July, Openpay estimated net bad debts to be 1.54% of total transaction volume, down from 2.89% in the fourth quarter FY20.

Compare this to Afterpay’s estimated net transaction loss of just 0.55% of underlying sales for FY20. This will be a key metric to focus on if economic conditions worsen over the next 12 months.

More reading

• Take a look at last week’s best performing ASX shares
• 2 important investing lessons you might have forgotten
• Should you invest in Splitit shares?
• 2 exciting high-growth ETFs to buy for high returns today
• Openpay share price on watch after July update

Rhys Brock owns shares of AFTERPAY T FPO, Ramsay Health Care Limited, REA Group Limited, and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup Limited, Ramsay Health Care Limited, REA Group Limited, and Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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